CCC3 In November 2009 after having incorporated Cookie Creations Inc., Natalie b
ID: 2347794 • Letter: C
Question
CCC3 In November 2009 after having incorporated Cookie Creations Inc., Natalie beginsoperations. She has decided not to pursue the offer to supply cookies to Biscuits. Instead
she will focus on offering cooking classes. The following events occur.
Nov. 8 Natalie cashes in her U.S. Savings Bonds and receives $520, which she deposits
in her personal bank account.
8 Natalie opens a bank account for Cookie Creations Inc.
8 Natalie purchases $500 of Cookie Creations’ common stock.
11 Natalie designs a brochure and a poster to advertise the company and the
services available.
11 Cookie Creations pays $95 to have the advertising brochures and posters
printed.
14 Cookie Creations pays $125 to purchase baking supplies, such as flour,
sugar, butter, and chocolate chips.
15 Natalie starts to gather some baking equipment to take with her when
teaching the cookie classes. She has an excellent top-of-the-line food processor
and mixer that originally cost her $550. Natalie decides to start using it
only in her new business. She estimates that the equipment is currently
worth $300, and she transfers the equipment into the business in exchange
for additional common stock.
16 The company needs more cash to sustain its operations. Natalie’s grandmother
lends the company $2,000 cash, in exchange for a two-year, 9% note
payable. Interest and the principal are repayable at maturity.
17 Cookie Creations pays $900 for additional baking equipment.
18 Natalie schedules her first class for November 29. She will receive $100 on
the date of the class.
25 Natalie books a second class for December 5 for $150. She receives a $60
cash down payment, in advance.
29 Natalie teaches her first class, booked on November 18, and collects the
$100 cash.
30 Natalie’s brother develops a website for Cookie Creations Inc. that the company
will use for advertising. He charges the company $600 for his work, payable at
the end of December. (Because the website is expected to have a useful life of
two years before upgrades are needed, it should be treated as an asset.)
30 Cookie Creations pays $1,200 for a one-year insurance policy.
30 Natalie teaches a group of elementary school students how to make Santa
Claus cookies. At the end of the class, Natalie leaves an invoice for $300
with the school principal. The principal says that he will pass it along to the
business office and it will be paid some time in December.
30 Natalie receives a $50 invoice for use of her cell phone. She uses the cell
phone exclusively for Cookie Creations Inc. business. The invoice is for services
provided in November, and payment is due on December 15.
Instructions
(a) Prepare journal entries to record the November transactions.
(b) Post the journal entries to the general ledger accounts.
(c) Prepare a trial balance at November 30, 2009.
(c) Trial balance total $3,910
Explanation / Answer
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